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Simple math is you need 2 exits that return the fund together 3 times over — so here, two \$1b+ exits. And then all the rest do the other 2x.

There generally are power laws on distributions as well:

Just doing a 2x fund is hard:

• Your top investment has to do 1x+ of the fund, call that a \$1b+ exit;
• Your next one does 0.5x of the fund — call that a \$500m exit; and
• All the rest together do 0.5x as a group …

That gets you to 2x.

Now …

So if you want to do 5x, you have to do 2.5x better than that, i.e.:

• 1 investment that Returns Twice the Fund, i.e. that IPOs / sold at \$2b+
• 1 investment that Returns The Entire Fund. I.e., IPOs / sold at \$1b+.
• 2 investments that Return Half the Fund. Two sales at \$500m each.
• 5–10 exits from the rest of the investments that together Return the Fund. I.e., are worth \$1b together.

This is kinda daunting. And this also assumes 10% ownership on exit. You have to buy at least 10% on exit with a fund that size to make this math work.

Now, one Facebook or Snapchat or WhatsApp can do it all in one fell swoop. But man. It’s hard.

Especially in B2B, where the exits are smaller.

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